The Trump administration is demanding that at least 60 U.S. colleges and universities change their policies or lose out on billions of dollars in federal funding.

In Harvard University’s case, the government has accused the Ivy league school – so far without providing any specific evidence – of violating some students’ civil rights by allowing other students to engage in what the authorities characterize as antisemitic speech. The government has demanded broad oversight of Harvard’s admissions policies, along with changes in its hiring processes and campus culture.

Harvard stands to lose out on more than US$2.2 billion. It may seem to be better insulated from this pressure than many other schools because it has the nation’s largest educational endowment – a reservoir of stocks, bonds and other financial assets that helps fund its operations, research and scholarships. Harvard’s endowment totaled more than $53 billion in 2024.

As a nonprofit law scholar, who served in the Treasury Department’s Office of Tax Policy in the 1980s, I study and write about both state and federal law as it applies to nonprofit organizations. I believe that the law permits most colleges and universities to increase spending from their endowments in light of the financial pressures so many of them are facing.

Not all endowments are alike.

They tend to be composed of an array of smaller funds, some of which are subject to legal restrictions that make it impossible for the schools they support to freely use those assets.

Universities must respect the limits donors put on their gifts, such as tying them to specific scholarships, funding jobs held by certain kinds of professors or supporting the construction or maintenance of a particular building.

It’s up to a university’s governing board to decide how much of........

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